Capital Injection into Banks: Beyond the Top Guns, Others to Look At

The U.S. government's capital injection into our country's banking system via the government's purchase of preferred shares of publicly traded bank holding companies will prove to be a significant event in the historical timeline of the current financial crisis.  It will mark the point at which our financial system was saved from certain self inflicted destruction by a government unwilling to usher in a prolonged dark era in the economic development of the United States.  The government's initial $250 billion dollar investment in the countries largest banks will be significant in that it will dramatically strengthen the balance sheets of the companies that hold the vast majority of the banking systems assets and deposits. Nevertheless, Treasury officials should move quickly to boost the capital levels at the country's regional and foreign subsidiary banks as they are likely more challenged by liquidity issues then their larger money center peers.  In looking at the country's largest banks and thrifts by total assets as of 6/30/08 (the most recent date that the data is available from the FDIC) we can see that the country's 100 largest bank holding companies had over 9.8 trillion dollars in assets at their bank subsidiaries.  In the second chart you will see the remaining banks after the various subsidiary companies are accounted for and consolidated into their parent companies and finally I will turn to a discussion of the country's regional banks that are included in the FDIC's list of the top 100 banks and thrifts in the U.S.   

Top 100 Banks & Thrifts
As of 6/30/2008
100 Total Banks

Institution Name	Ticker	Total Assets($000)
JPMorgan Chase Bank	JPM	1,378,468,000
Bank of America	BAC	1,327,429,079
Citibank	C	1,228,445,000
Wachovia Bank	WB	670,639,000
Wells Fargo Bank	WFC	503,327,000
U.S. Bank	USB	242,307,928
HSBC Bank USA	HBC	177,466,246
SunTrust Bank	STI	171,500,853
FIA Card Services	BAC	165,349,652
National City Bank	NCC	151,164,598
Regions Bank	RF	139,353,930
State Street Bank & Trust Co.	STT	138,858,742
Branch Banking and Trust Co.	BBT	132,884,104
RBS Citizens	RBS	132,050,955
The Bank of New York Mellon	BK	130,062,000
PNC Bank	PNC	128,348,405
Countrywide Bank	BAC	116,384,145
Capital One	COF	108,520,315
TD Bank	TD	98,855,014
Keybank	KEY	98,047,883
ING Bank	ING	79,464,958
Sovereign Bank	SOV	79,189,002
Wachovia Mortgage	WB	76,795,109
Citibank (South Dakota)	C	75,004,087
Chase Bank USA	JPM	74,462,629
LaSalle Bank	BAC	68,378,716
Fifth Third Bank	FITB	67,272,497
Comerica Bank	CMA	65,961,348
The Northern Trust Co.	NTRS	65,199,779
Manufacturers
& Traders Trust Co.	MTB	65,079,643
Bank of the West	BNPQY	63,262,439
Compass Bank	BBVA	61,067,148
Union Bank of California	MTU	60,227,793
Merrill Lynch Bank USA	BAC	58,042,116
M&I Marshall and Ilsley Bank	MI	57,686,276
The Huntington National Bank	HBAN	54,842,484
Fifth Third Bank	FITB	54,160,865
Hudson City Savings Bank	HCBK	49,149,097
E*TRADE Bank	ETFC	46,708,354
Deutsche Bank Trust Co.	DB	46,071,000
Harris	BMO	41,592,254
Mellon Bank,	BK	39,476,494
Bank of America, Rhode Island	BAC	39,211,041
Morgan Stanley Bank	MS	38,530,000
Citizens Bank of Pennsylvania	RBS	38,174,843
LaSalle Bank Midwest	BAC	37,642,708
First Tennessee Bank	FHN	35,286,528
GMAC Bank	GM	31,935,992
USAA Federal Savings Bank	-	31,539,259
Capital One Bank (USA)	COF	31,301,809
RBC Bank (USA)	RY	31,263,091
Merrill Lynch Bank & Trust Co.	BAC	31,094,658
Discover Bank	DFS	30,501,647
Wells Fargo Bank South Central	WFC	29,769,000
New York Community Bank	NYB	29,006,619
Wachovia Bank, FSB	WB	27,992,417
UBS Bank USA	UBS	27,316,033
Banco Popular de Puerto Rico	BPOP	26,101,000
Colonial Bank	CNB	25,986,562
Goldman Sachs Bank USA	GS	25,726,832
American Express Centurion Bank	AXP	25,348,661
American Express Bank, FSB.	AXP	25,024,015
Associated Bank	ASBC	22,059,071
Charles Schwab Bank	SCHW	21,608,387
Astoria Federal
Savings & Loan Association	AF	21,598,603
Zions First National Bank	ZION	20,195,316
Citicorp Trust Bank, fsb	C	19,634,564
Bank of America California	BAC	19,469,401
People's United Bank	PBCT	18,734,368
Firstbank of Puerto Rico	FBP	17,841,107
Webster Bank	WBS	17,351,831
TD Bank USA	TD	17,329,254
Westernbank Puerto Rico	WHI	17,081,956
TCF National Bank	TCB	16,468,963
State Farm Bank, F.S.B.	-	16,152,741
Bank of Oklahoma	BOKF	16,092,004
City National Bank	CYN	15,970,869
Guaranty Bank	GFG	15,937,098
AmTrust Bank	AFSI	15,898,116
Commerce Bank	CBSH	15,592,314
GE Money Bank	GE	15,392,648
Chevy Chase Bank, F.S.B.	-	14,913,528
Flagstar Bank, FSB	FBC	14,567,785
Wells Fargo Bank Northwest	WFC	14,470,000
MidFirst Bank	-	14,217,588
BankUnited, FSB	BKUNA	14,200,460
Carolina First Bank	TSFG	13,937,707
The Frost National Bank	CFR	13,796,772
First-Citizens Bank & Trust Co.	FCNCA	13,539,818
BancorpSouth Bank	BXS	13,394,684
First Hawaiian Bank	BNPQY	13,026,627
Valley National Bank	VLY	12,965,879
Banco Popular North America	BPOP	12,871,285
United Commercial Bank	UCBH	12,851,854
Bank of America Oregon	BAC	12,721,850
Downey Savings and Loan Assoc.	DSL	12,630,056
Citizens Bank	RBS	12,372,252
Sterling Savings Bank	STSA	12,215,752
Amegy Bank	ZION	12,135,590
Washington Federal Savings &
Loan Association	WFSL	11,794,035

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Top Banks After Parent-Subsidiary Consolidation & Recent Mergers

As of 6/30/08
73 Total Banks
Institution Name	Ticker	Total Assets($000)
Bank of America	BAC	1,856,253,965
JPMorgan Chase Bank	JPM	1,452,930,629
Citibank	C	1,323,083,651
Wells Fargo Bank	WFC	1,322,992,526
U.S. Bank	USB	242,307,928
RBS Citizens	RBS	182,598,050
HSBC Bank USA	HBC	177,466,246
SunTrust Bank	STI	171,500,853
The Bank of New York Mellon	BK	169,538,494
National City Bank	NCC	151,164,598
Capital One	COF	139,822,124
Regions Bank	RF	139,353,930
State Street Bank and Trust Co.	STT	138,858,742
Branch Banking and Trust Co.	BBT	132,884,104
PNC Bank	PNC	128,348,405
Fifth Third Bank	FITB	121,433,362
TD Bank	TD	116,184,268
Keybank	KEY	98,047,883
ING Bank	ING	79,464,958
Sovereign Bank	STD	79,189,002
Bank of the West	BNPQY	76,289,066
Comerica Bank	CMA	65,961,348
The Northern Trust Company	NTRS	65,199,779
Manufacturers and Traders Trust Co.	MTB	65,079,643
Compass Bank	BBVA	61,067,148
Union Bank of California	MTU	60,227,793
M&I Marshall and Ilsley Bank	MI	57,686,276
The Huntington National Bank	HBAN	54,842,484
American Express Bank	AXP	50,372,676
Hudson City Savings Bank	HCBK	49,149,097
E*TRADE Bank	ETFC	46,708,354
Deutsche Bank Trust Company	DB	46,071,000
Harris National Association	BMO	41,592,254
Banco Popular de Puerto Rico	BPOP	38,972,285
Morgan Stanley Bank	MS	38,530,000
First Tennessee Bank	FHN	35,286,528
Zions First National Bank	ZION	32,330,906
GMAC Bank	GM	31,935,992
USAA Federal Savings Bank	-	31,539,259
RBC Bank (USA)	RY	31,263,091
Discover Bank	DFS	30,501,647
New York Community Bank	NYB	29,006,619
UBS Bank USA	UBS	27,316,033
Colonial Bank	CNB	25,986,562
Goldman Sachs Bank USA	GS	25,726,832
Associated Bank	ASBC	22,059,071
Charles Schwab Bank	SCHW	21,608,387
Astoria Federal	AF	21,598,603
Savings and Loan Association
People's United Bank	PBCT	18,734,368
Firstbank of Puerto Rico	FBP	17,841,107
Webster Bank	WBS	17,351,831
Westernbank Puerto Rico	WHI	17,081,956
TCF National Bank	TCB	16,468,963
State Farm Bank	-	16,152,741
Bank of Oklahoma	BOKF	16,092,004
City National Bank	CYN	15,970,869
Guaranty Bank	GFG	15,937,098
AmTrust Bank	AFSI	15,898,116
Commerce Bank	CBSH	15,592,314
GE Money Bank	GE	15,392,648
Chevy Chase Bank	-	14,913,528
Flagstar Bank	FBC	14,567,785
MidFirst Bank	-	14,217,588
BankUnited	BKUNA	14,200,460
Carolina First Bank	TSFG	13,937,707
The Frost National Bank	CFR	13,796,772
First-Citizens Bank & Trust Co.	FCNCA	13,539,818
BancorpSouth Bank	BXS	13,394,684
Valley National Bank	VLY	12,965,879
United Commercial Bank	UCBH	12,851,854
Downey Savings and Loan Assoc.	DSL	12,630,056
Sterling Savings Bank	STSA	12,215,752
Washington Federal
Savings and Loan Association	WFSL	11,794,035

In addition to consolidating the 100 largest banks with their respective parent companies, we must also remove from the list the foreign bank subsidiaries that are operating in the United States as it will likely be more difficult for the Treasury to take preferred share positions in them then U.S. domiciled regional banks.   Of the banks that compose the 100 largest U.S. banks by assets, the 13 foreign banks on the list account for a over 1 trillion in assets.  While these banks should be in sound shape as a result of their separate capital structures and parent companies that are once again healthy they will likely still need the assistance of the U.S. government to navigate the credit crisis as they were some of the biggest buyers of mortgage backed securities.  As a result of the complexities that come along with investing in foreign subsidiaries the Treasury should turn its primary attention and the majority of the its pocketbook to purchasing preferred stock in the countries largest regional banks.   After the removal of domestic subsidiaries and foreign bank subsidiaries we are left with the country's 49 largest regional banks with total assets of over $2.3 trillion, the list of these 49 regional banks can be found below the list of the foreign bank subsidiaries, which is below.  It should be noted that the list of the U.S.'s 49 largest regional banks excludes the banks that have already received capital injections from the government.      

Foreign Bank Subsidiaries As of 6/30/08
13 Total Banks

Institution Name	Ticker	Total Assets($000)
RBS Citizens	RBS	182,598,050
HSBC Bank USA	HBC	177,466,246
TD Bank	TD	116,184,268
ING Bank	ING	79,464,958
Sovereign Bank	STD	79,189,002
Bank of the West	BNPQY	76,289,066
Compass Bank	BBVA	61,067,148
Union Bank of California	MTU	60,227,793
Deutsche Bank Trust Company	DB	46,071,000
Harris National Association	BMO	41,592,254
Banco Popular de Puerto Rico	BPOP	38,972,285
RBC Bank (USA)	RY	31,263,091
UBS Bank USA	UBS	27,316,033

______________________

Consolidated Public, Non-Foreign Banks, With No Government Capital Injection
As of 6/30/08
49 Total Banks

Institution Name	Ticker	Total Assets($000)
U.S. Bank	USB	242,307,928
SunTrust Bank	STI	171,500,853
National City Bank	NCC	151,164,598
Capital One	COF	139,822,124
Regions Bank	RF	139,353,930
Branch Banking and Trust Co.	BBT	132,884,104
PNC Bank	PNC	128,348,405
Fifth Third Bank	FITB	121,433,362
Keybank	KEY	98,047,883
Comerica Bank	CMA	65,961,348
The Northern Trust Company	NTRS	65,199,779
Manufacturers and Traders Trust Co.	MTB	65,079,643
M&I Marshall and Ilsley Bank	MI	57,686,276
The Huntington National Bank	HBAN	54,842,484
American Express Bank	AXP	50,372,676
Hudson City Savings Bank	HCBK	49,149,097
E*TRADE Bank	ETFC	46,708,354
First Tennessee Bank	FHN	35,286,528
Zions First National Bank	ZION	32,330,906
GMAC Bank	GM	31,935,992
Discover Bank	DFS	30,501,647
New York Community Bank	NYB	29,006,619
Colonial Bank	CNB	25,986,562
Associated Bank	ASBC	22,059,071
Charles Schwab Bank	SCHW	21,608,387
Astoria Federal	AF	21,598,603
Savings and Loan Association
People's United Bank	PBCT	18,734,368
Firstbank of Puerto Rico	FBP	17,841,107
Webster Bank	WBS	17,351,831
Westernbank Puerto Rico	WHI	17,081,956
TCF National Bank	TCB	16,468,963
Bank of Oklahoma	BOKF	16,092,004
City National Bank	CYN	15,970,869
Guaranty Bank	GFG	15,937,098
AmTrust Bank	AFSI	15,898,116
Commerce Bank	CBSH	15,592,314
GE Money Bank	GE	15,392,648
Flagstar Bank	FBC	14,567,785
BankUnited	BKUNA	14,200,460
Carolina First Bank	TSFG	13,937,707
The Frost National Bank	CFR	13,796,772
First-Citizens Bank & Trust Co.	FCNCA	13,539,818
BancorpSouth Bank	BXS	13,394,684
Valley National Bank	VLY	12,965,879
United Commercial Bank	UCBH	12,851,854
Downey Savings and Loan Assoc.	DSL	12,630,056
Sterling Savings Bank	STSA	12,215,752
Washington Federal	WFSL	11,794,035
Savings and Loan Association

JPMorgan, Bank of America, Wells Fargo, Citigroup, The Bank of New York & State Street, with combined assets on 6/30/08, including their recent acquisitions, of 6.1 trillion represent the backbone of the American financial system.  Their 6.1 trillion in total assets clearly represent the majority of the assets of the American banking system, especially when compared to the 2.3 trillion of assets held by the country's 49 largest U.S. domiciled regional banks.  While this raises significant concern of deposit concentration, as I talked about here, it shows us how far we have come in the last week to now be able to say that our country's six largest financial institutions are now completely and utterly sound with the explicit backing of the world's most influential financial backer and lender of last resort.  In expanding its preferred share purchases to the regional banks the U.S. government can succeed in bringing about one of the greatest rallies in the financial markets of all time as a hand cuffed economy begins to come back to life, driven by banks willing, eager and capable of providing the credit needed to drive the economy of America.

In order to ensure that these preferred purchases will not be viewed as a sign of weakness for the regional banks that take the governments money, Paulson & Co. must mandate that all of the 49 largest regional banks and if possible the 13 largest foreign subsidiaries all sell preferred stakes to the government.  If this display of unity were to be taken it would not be surprising at all to see a further rally in the market as it would show to the investment community that all of the U.S.'s 100 largest financial institutions composing the vast majority of the country's total banking assets are completely sound.   

For Further Review:

NYT's Article on Capital Injection

FDIC's Website

Disclosure: Long NCC